The Road to Gurgaon

How the brokers of land and power built the Millennium City

01 January, 2014

[ I ]

AS NATIONAL HIGHWAY 8 LEAVES DELHI, starting a 1,500-kilometre trek south-west towards Jaipur and Ahmedabad, and then on to Mumbai, it skirts the northern foothills of the Aravalli range. Here, the road cuts through the arid plains of southern Haryana, where the city of Gurgaon—more than a million people living in thousands of acres of glass high-rises, gated communities, and unauthorised settlements—has materialised over the past 35 years.

On a hot afternoon last summer, I drifted slowly down the highway toward the fringes of Gurgaon, where the Millennium City, as it’s often called, is still very much under construction. Beyond a toll plaza at Kherki Daula village, about 30 kilometres outside Delhi, the road narrowed, encroached upon by sand. Trucks whipped up dust devils as they trundled past me toward the industrial hub of Manesar. Intersecting the highway, a newly laid four-lane road bordered an empty tract of land. Straddling it was a big blue hoarding, welcoming arrivals to Vatika City—one of scores of suburban developments gradually replacing the farmland on the expanding edges of Gurgaon.

I pulled onto the road, crossing under its blue sign. Down the centre of the strip ran a median planted with saplings—the beginnings, perhaps, of Vatika City’s main boulevard. (In a recent full-page newspaper advertisement, the Vatika Group announced, “What Edwin Lutyens started, we are proud to carry on.”) A row of vacant tents stood along one side, their worn-out pink tarpaulins flapping in a baking wind.

Gurgaon rose out of the farmland of southern Haryana after the state opened up to private developers in 1975. UDIT KULSHRESTHA FOR THE CARAVAN

About half a kilometre from the highway, the road petered out into a sand drift. I turned back and stopped at a concrete hut I had seen, shaded beneath the embrace of two giant neem trees. A vinyl board, of the sort that is ubiquitous in this part of Haryana, announced the offices and mobile phone numbers of “Dev Property: Booking. Re-sale. Renting. Purchase.” A handpump and a small water trough sat close by, on a patch of land that seemed only recently fallowed. From a dust bowl behind the field rose a phalanx of unfinished apartment blocks, roughly 60 metres high.

Under a bamboo overhang supported on one side by the hut’s roof, two middle-aged men sat in front of a laptop, at a plastic table spread with laminated maps and colourful brochures detailing new building projects. One of the men stood up and introduced himself, handing me his visiting card—“Mahesh Yadav. Property Adviser.” Yadav works as a real estate broker, a middleman selling completed and under-construction residential properties for a commission. A former army man (now plumper than he might have been during his military days), he told me he had tired of the “belt and uniform job” and enjoyed being his “own boss”. “Even if I sit idle for two months without striking a deal, it doesn’t matter,” he said. “In the army, we used to get paid a measly Rs 15,000 for a 24-hour job. Jitna paisa real estate mein hai na, wo kahin bhi nahin hai (nowhere is there as much money as there is in real estate).” He claimed to have facilitated about 100 deals since he got into the business in 2011.

Yadav is among the many beneficiaries of a real-estate boom in the area, which consists of a swathe of villages and farmland encircling the dense centre of the city, and which developers have dubbed “New Gurgaon”. The sectors that make up this zone—in official documents, they are simply numbered from 58 to 115—roughly follow the curve of the as yet incomplete 150-metre wide, 18-kilometre long Dwarka Expressway, an expansion of the road connecting the Delhi suburb of Dwarka, next to Indira Gandhi International Airport, with Kherki Daula village. On billboards, newspaper advertisements and internet banners, developers such as DLF, Ansal Housing, Raheja, Emaar MGF and others are touting future residential projects all along this artery. The sector numbers increase with their proximity to Dwarka, as do the real estate prices. In Sector 109 is the developer Homestead’s upcoming Michael Schumacher World Tower, which is endorsed by the Formula 1 driver. The building plan features a helipad, which residents may well need to use: the Dwarka Expressway, meant to ease traffic on National Highway 8, was supposed to be ready by March 2012, but a large portion of the construction has been held up due to litigation over the acquisition of the land.

Real estate entrepreneur Navin Raheja and his son Nayan. UDIT KULSHRESTHA FOR THE CARAVAN

The growth in New Gurgaon has been steroidal. Although the population of Gurgaon district increased at an extraordinary rate in the decade between 2001 and 2011, the property market on the edges of the city is fuelled as much by speculation as by a need for new homes. Builders finance construction projects—often pitched to the luxury end of the market—with cash from individual investors and prospective residents. Prices are kept high by legions of brokers constantly bringing buyers into the system. As Gurgaon expands outwards, aided by a government that’s been more than willing to help builders acquire land, it needs a steady infusion of new blood—prospective buyers—to fuel construction. Yadav’s job is to find them. “It’s a nashaa [high],” he said. “Once you get into this, it’s tough to get out.”

Yadav’s makeshift office is one of innumerable similar enterprises dotting Gurgaon’s south-western edges. Many of the brokers I spoke to put the total number of official and unofficial middlemen in Gurgaon at close to one lakh, but it seems that every second person in the district is involved in real estate in some way. When the weather’s not so unforgiving, the pink tents in Vatika City fill up with brokers and customers, Yadav said. “Come on the weekend. You will see what it is like—a fair.”

On a typical day, a steady stream of brokers and friends from the nearby village of Rampura, where Yadav lives, passes through the Dev Property office, sharing the shade and a hookah. The farmers living here once grew wheat and millet or herded cattle, but began selling whatever plots they held in 2004, when a rumour spread that the Haryana government might acquire their land at cheap prices in order to build an airport. (None of them knew from where the rumour originated, and nothing came of it.) Much of the income was spent on buying big cars and building kothis (bungalows). Some bought agricultural land further away, in Rajasthan, which they now lease out. Others erected small tenements partitioned into one-room flats that they rent to labourers employed at factories (such as the Maruti Suzuki plant, in nearby Manesar) or to domestic workers. Most locals are involved in one way or another in the property market, and some have become rich. Many others lost their livelihoods when they cashed in their farms, and have long ago burned through the money.

The only holdouts in the area are a pair of brothers from Rampura who own the patch on which Dev Property stands; they refuse to sell because the Vatika Group denied their request for four flats in the project that it wants to construct there. Even so, the developer sold titles to the non-existent duplex homes for around Rs 18 lakh; now, they are changing hands on the resale market for upwards of Rs 65 lakh. Investors expect the farmers to eventually fold. “Most buyers don’t care—as long as their property value is appreciating,” Yadav said. “The more delay the better.”

(Left to right) Amit Jain, Sanjay Bhasin and Harsh Sehgal of the Belaire Owners Association, which has taken on DLF. UDIT KULSHRESTHA FOR THE CARAVAN

On one of several afternoons I spent in the Dev Property offices, Vijay Singh, a former sarpanch of Rampura, dropped by. In his village, peacocks strut on the new walls of ostentatious kothis, but there is no drainage system and sewage collects in a festering central pond. When electricity is available, a communally purchased pump siphons out the dirty water, which flows onto the main roads, jammed with outsized cars. In a complaint—symptomatic of Haryana’s caste divides—that I would often hear echoed in these parts, Singh accused the Congress chief minister Bhupinder Singh Hooda’s government of directing state funds to Jat-dominated areas north-west of Delhi, at the expense of the Ahirs, or Yadavs, who are concentrated in the south. “Hooda has destroyed the state,” he said.

Singh complained that the sudden inflow of cash for land had lead to social problems too. He talked about chronic alcoholism among the young men of the village. “Barbaadi ka main adda Gurgaon ho gaya,” Singh said—Gurgaon has become the centre of ruination. It was the inverse of what the vitreous high-rise colonies coming up around Dev Property seemed to represent.

[ II ]

THE CHANGES ROILING NEW GURGAON have been headed down National Highway 8—once the Jaipur Road—for more than six decades. Although Gurgaon is often seen as a city built by private enterprise in the years since economic liberalisation, it is the product of a longer history of negotiations between governments, businesses, builders, landholders, labourers and middle-class settlers. These groups form the speculative ecosystem of Gurgaon’s real estate market, in which—first on the outskirts of Delhi and now in the outlying sectors—growth has built upon projected growth for years, but long-term sustainability has become an increasingly surreal expectation.

Some of the most important conditions for Gurgaon’s rise were created by Partition. From 1947 to 1951, Delhi’s population rose by roughly 80 percent to 1.7 million. To accommodate this explosion, new residential colonies built by private developers sprouted up around the British-era centre of the city. In 1957, the Delhi Development Authority was formed to bring this expansion under the control of the state, and private development ventures were effectively barred from the capital. By 1961, there were over 2.6 million people living in Delhi. Five years later, when Haryana was carved out of Punjab, the new state’s government capitalised on its proximity to the national capital by aggressively pursuing industrialisation and urbanisation. In agricultural areas to the city’s south—such as Faridabad, in the relatively lush eastern watershed of the Aravalli range—new factories and homes were planned and, in 1975, Haryana opened up to private development.

Kunwer Sachdev, whose flat looks over the DLF Golf & Country Club, made his fortune in the inverter business in the late 1990s. UDIT KULSHRESTHA FOR THE CARAVAN

Due to chronic water shortages and an inhospitable climate, Gurgaon district—which is adjacent to Faridabad, but on the western side of the hills—was not an important part of Haryana’s early development efforts and was considered a backwater. In 1979, Faridabad was separated from Gurgaon. Unlike its neighbour, whose urbanisation was closely planned by a municipal corporation from the early years of liberalisation, Gurgaon was relatively free from local administrative control; the acquisition and development of its rural lands could be directed more or less arbitrarily by the chief minister’s office in the state capital of Chandigarh.

Among the first companies to take advantage of Gurgaon’s neglect was Delhi Land and Finance (DLF), which was founded a year before Independence and built several of Delhi’s post-Partition neighbourhoods. The company, started by Chaudhary Raghvendra Singh, a high-ranking army officer from a politically connected Jat family from Rohtak, bought its first piece of Gurgaon land in 1980. By that time, the company was being run by Raghvendra Singh’s son-in-law, Kushal Pal Singh, who had connections to Rajiv Gandhi. KP Singh used these connections to lobby the state government in Chandigarh for permission to develop the plot. In 1981, DLF became the first company to get a license to develop property in Gurgaon—a 40-acre plot in what would eventually be part of DLF City. By 1983, a year after the opening of the first Maruti Suzuki plant (Sanjay Gandhi’s long-delayed project, which only came tofruition after he died), in a village called Dundahera toward the northern end of the Jaipur Road, DLF had permission to develop at least 556 acres in the area.

KP Singh had learnt a bullish method for financing DLF’s project from his father-in-law. He borrowed back the cash he had paid to farmers for their land, and used it to leverage construction costs. “I would ask them if they needed all that money,” he wrote in his 2011 autobiography, Whatever the Odds. “Invariably they said that they had never seen so much cash and did not need it for their kind of lifestyle … There were times when we bought land, handed over the money and then got them to give it back to us as investment in DLF on the very same day!”

In the subsequent decades, DLF, whose motto is “Building India”, did a great deal to shape Gurgaon—both geographically and in the public imagination. As the state began planning development and initiating infrastructure projects in the district, DLF worked to bend these in its favour. When National Highway 8 was being built, for example, the company successfully lobbied to have the route brought closer to one of its townships, it claims on its website. (It did something similar when the metro was being extended south from Delhi, according to news reports.) By his own account, KP Singh was also instrumental in convincing multinational corporations to set up offshore operations in Gurgaon. After putting up office buildings, DLF began marketing its residential developments as “walk-to-work” communities. Between 2001 and 2011, the population of Gurgaon district grew by nearly 75 percent to 1.5 million.

“I sometimes marvel at the relative ease with which I was able to acquire the 3,500 acres of raw land on which a large part of the city of Gurgaon stands today,” KP Singh wrote in his autobiography. Although other builders don’t rival DLF’s scale, its way of doing business is now being emulated in places like New Gurgaon (a moniker coined by DLF for marketing purposes). Highly leveraged companies, whose corporate prospectuses feature computer-generated images of luxurious housing colonies—in which many of the units are already sold, have aggressively acquired land here for new construction.

Instead of financing projects by taking back the proceeds from land sales, developers—who are referred to in government documents as “colonisers”—now use cash from speculators or prospective residents. In many cases, flats in a building project are sold before the project has been licensed—a tactic known as “pre-launch” or “soft-launch” sales. These sales were banned by the Haryana government in 2007, but they are still widespread. Builders of all kinds are guilty of this malpractice: those with no money to buy land; those with land but no money to build, or no clearances; and those selling non-existent apartments on land that is stuck under litigation.

On the back of this speculation, the cost of residential property has tripled or quadrupled. For example, the high-end DLF Icon went from Rs 2,800 per square foot in 2005 to Rs 15,000 per square foot in January 2012; a more affordable project, Orchid Petals, went from Rs 1,800 per square foot to Rs 8,750. The cost of developable land in Gurgaon also skyrocketed over the past decade, from Rs 14,000 per square yard to Rs 80,000. Most of the transactions—between landholders and developers, brokers and investors, speculators and residents—happen in cash. Arun Kumar, an economist and the author of The Black Economy in India, told me that “the rate of return here [in real estate] is higher than any other activity ... Real estate then becomes a conduit for the circulation of black income.” What’s made on one deal gets invested in the next. Fuelled by black money, “Gurgaon is on autopilot,” as veteran broker Sanjeev Khetrapal put it to me. Its economy is one of high liquidity and low transparency.

Politicians have thrived in this environment. Although specific instances of corruption are difficult to prove, there’s plenty of evidence that the political class as a whole finds the real estate market convenient for hiding disproportionate assets. There are numerous examples of politicians in Haryana making Gurgaon a much more hospitable place for property moguls by expanding the district’s catchment of developable land at a pace that’s unjustified by the growth of its population or industries. Developers in the district are constantly snatching up plots restricted to agricultural use, anticipating their inevitable rezoning to allow for highly profitable construction. Under Haryana’s two-time Congress chief minister Bhupinder Singh Hooda, Gurgaon’s major planning framework, the Gurgaon-Manesar Urban Development Master Plan, has been revised thrice in the past seven years. (In contrast, Faridabad recently announced its first master plan since 1991.) Several brokers told me they expected another update before the general election. In total, more than 56,000 acres have become developable. Almost 70 percent of this is zoned for residential property. Sanjay Sharma, a former chemical engineer and managing director of the brokerage firm Qubrex who shared some of his research with me, said that agricultural land could appreciate tenfold when it was rezoned; he knew of one parcel that was sold at Rs 50 lakh per acre in 2007 and was now worth Rs 5 or Rs 6 crore. At the same time, the government has done a notoriously poor job of actually administering Gurgaon—of building and maintaining public infrastructure and services, and keeping the city’s growth in line with its access to resources, especially electricity and water.

Today, the entire system seems to be under increasing strain. Villagers and white-collar migrants are fighting a growing number of lawsuits against developers and the state. The global financial crisis seems to have rattled the city; special economic zones (SEZs)—set up to lure industry but left largely vacant—were opened up to residential and commercial development in 2012. (Reliance, which had been allotted 1,383 acres of SEZ land by the government in 2006, had to relinquish this holding.) The balance sheets of even the biggest real estate firms have also taken a beating. DLF—whose IPO raised more than Rs 9,000 crore in 2007—lost nearly three-quarters of its value between 2008 and 2013; its debt increased by 70 percent while its earnings fell by 85 percent. It spent the past year selling off assets worth crores in an ongoing effort to pare down its net debt to Rs 17,500 crore by 31 March 2014. The Economic Times recently called the company one of the nation’s biggest “wealth destroyers”. Some people involved in the industry, pointing to a slowing economy and limited natural resources, maintain that Gurgaon’s growth has become toxic, and that the weight of its debt rests on the shaky foundations of inflated speculation.

[ III ]

LAST JANUARY, Navin Raheja, Chairman and Managing Director of Raheja Builders—one of the flashier real estate firms in Gurgaon—flaunted his success at his son’s wedding. “The theme was essentially palatial, very royal, very grand and the client wanted us to do something which hasn’t been done before,” the event manager said on an episode of CNBC’s Dream Wedding, which ran a feature on the nuptials. “The money, budget is not relevant at all … What matters is how grand is the wedding.” International pop star Shakira did not perform—as she had for KP Singh’s eightieth birthday—but a cocktail night, held in the ballroom of Delhi’s Oberoi hotel, included a show by dancers from the Moulin Rouge in Paris. “We are not quite accustomed to this kind of a dazzle, razzmatazz, but they worked hard for it—lovely young couple—and I wish them the best,” said the Congress minister for external affairs, Salman Khurshid, who told the Dream Wedding presenter that Raheja was a close friend.

The Signature Towers office buildings on National Highway 8, glimpsed from inside one of Gurgaon’s old villages. AMIT BHARGAVA / BLOOMBERG / GETTY IMAGES

When I met Raheja last summer at his bungalow in Sainik Farm—an affluent unauthorised residential colony in south Delhi—he said there were 38 cabinet and chief-minister level guests at the reception, including the Congress minister Ambika Soni, and Tejinder Khanna, then the lieutenant governor of Delhi (whom Raheja counted as “chief-minister rank”). “Out of thousands of apartments I make, I told myself I didn’t build two apartments and spent the money on my son’s wedding instead,” he said.

According to the story that Raheja (no relation to the well-known Mumbai business family of the same name) told me, success found him. In 1989, after the failure of his earlier business ventures, including a Lambretta scooter dealership, Raheja “put up an umbrella and four chairs” in Sainik Farm and began trading in real estate. Soon thereafter, a milkman told Raheja about a friend’s plot for sale near his home, in Gurgaon’s Tigra village. Following this tip, Raheja said he acquired 172 acres in the area with very little capital in hand. DLF had constructed a few buildings within sight of the village, which made the land appreciate all the more quickly. “I used to buy at one and a half lakh [per acre] and sell at Rs 4 lakh,” Raheja said. “I took nine months time from the farmers and found investors in a month or so, so I was making money faster than I had to pay it back.” He soon got into the property development game. Raheja claimed he now handles projects worth Rs 10,000 crore in Gurgaon, and that the price of his properties had increased 250 to 300 percent in the past five years. He recently partnered with Arabtec, the construction company that built the world’s tallest building, Dubai’s Burj Khalifa, a replica of which stands on his office table.

But many of Raheja’s projects are still in their early stages. Last summer, when I went to visit the site of Revanta, one of his tie-ups with Arabtec, all I could see was some rudimentary construction and a water tanker with “Arabtec” written on it. In fact, Raheja only has four completed projects in the area: a mall each in Gurgaon and Manesar, the latter with an attached budget chain hotel; and Atlantis, a condominium complex on National Highway 8. (“The legendary city of the elites is back. Atlantis is resurrecting itself again,” declares the development’s marketing brochure.) But there are 21 upcoming projects advertised on the company’s website. “I have grown faster, no? Faster than anybody else, if I am not wrong,” Raheja said. His company’s tag line is “Building. Advanced. Lifestyles.”

Outwardly, builders like Raheja insist they’ve succeeded in spite of bad government, blaming bureaucrats for delaying the various approvals their projects need. When I asked Raheja about the number of politicians at his son’s wedding, he said, “They all know me but I still have to hire consultants and get it done. I have to take 50 clearances for a project. That means crossing 50 tables. I don’t want to explain it. Tomorrow you will write that I pay bribes. These are not people sitting there to help build the country.” His face creased with tension as he continued, “If I have to get electricity connection, I won’t get it unless their greed is fulfilled.” Raheja is chairman of the Real Estate Council of ASSOCHAM and an executive committee member of FICCI and CII—India’s top chambers of commerce—and the president of NAREDCO (National Real Estate Development Council). He has lobbied, through NAREDCO, for more streamlined regulations, like a single-window clearance system. “But the bureaucrats opposed me because their dukaan (business) will end with that,” he said. He later added, diplomatically, “We have to be foresighted. We have to be friendly with all these people. We have to be useful to them and they have to be useful to us.”

Bhupinder Singh Hooda, Haryana’s chief minister, was also present at Raheja’s son’s wedding. Hooda holds the portfolios of the Directorate of Town & Country Planning (DTCP), the Haryana Urban Development Authority (HUDA), and the Haryana State Industrial & Infrastructure Development Corporation (HSIIDC), and every file related to land use goes to the chief minister for approval. Since first taking power, in March 2005, Hooda has done perhaps more than any other politician to boost the property market in Gurgaon. In addition to notifying three revisions of the district master plan, Hooda’s government has been on a license-issuing bonanza. In October 2012, The Hindu reported that his office had approved development licenses for more than 20,500 acres in Haryana—an increase of almost 150 percent over the previous 23 years combined. Hooda “allocated licences to over 350 real estate firms of all sizes, most of which were unknown or had no experience whatsoever in property development,” Shalini Singh, who has investigated the subject in depth, wrote. The number of clearances peaked during the boom between 2006 and 2008. In May 2013, she reported that there was “an over 30-fold surge in the purchase of land” by builders after Hooda took office in 2005—a clear sign of their confidence in the liberality of his regime.

Continual revisions of the master plan and the free flow of licenses have created a robust trade in insider information between developers and politicians. Since farmland is cheaper but far less profitable than developable land, the trick for builders and speculators is to acquire agricultural plots just before they get rezoned. Knowing in advance which areas are about to be incorporated into the master plan, or where an important thoroughfare will soon be slated for construction, can yield eventual returns of up to 40 times the initial investment. Ramprastha Builders, for example, “purchased roughly 500 acres of land at an average rate of Rs 1 crore/acre … precisely in those areas which were later changed into residential use in MP2021,” Shalini Singhwrote. “The value of this huge acreage immediately escalated 10 times upon notification of the Plan, jumping further to roughly Rs 40 crore/acre, after these were licensed in phases into plotted and group housing projects from 2008—an overall escalation of roughly Rs 19,500 crore.”

“Whoever is spending money to get the information will get it,” Ramesh Menon, a land transaction expert and director of Certes Realty, told me. “If you are hedging a risk without documents out in the public domain, you get exponential returns, as high as six times. I knew some of the things about the Master Plan a couple of years back.” The information that reaches local landholders is often of a different kind; like the former farmers of Rampura village, they hear the state is going to acquire land for some public purpose—an airport, a road—at cheap rates, so they panic and sell to builders. Many farmers in New Gurgaon echoed this thought: “Sarkar se khatra rehta hai”—the government poses a danger.

The increase in licenses and the revision of master plans has been justified by dubious population projections. In 2011, Gurgaon district’s population was 15 lakh and was expected to shoot up to more than 42 lakh by 2031, according to the latest master plan—an annual growth rate of roughly 5.3 percent. “More than one lakh people can’t be expected to migrate to Gurgaon every year,” the retired chief town planner of Haryana, Raj V Singh, told me. “There is no town in India of Gurgaon’s size that has attained this kind of projected growth.” He believed the figures were exaggerated to encourage the conversion of farmland into developable real estate. “The inflated population figures have damaged the planning process and the speculation has increased the cost of land tremendously,” he said. The National Capital Regional Planning Board projects that, by 2021, Gurgaon will have a maximum population of only 21.53 lakh—a growth rate of about 3.7 percent.

New Gurgaon has been the centre of much of the recent activity in the district’s property market. A failed SEZ—cited as the primary reason for the third master plan revision—was subsequently rezoned, adding thousands of acres to the playing field for politicians and developers. Shikohpur village—the site of a suspect but ostensibly legal land deal between DLF and the son-in-law of Congress President Sonia Gandhi, Robert Vadra, in 2012—falls in Sector 83, where the Dwarka Expressway is meant to intersect National Highway 8. Navin Raheja’s Revanta project, which Raheja claims will be one of the tallest buildings in India, is across the highway, in Sector 78, opposite the Hyatt Regency Gurgaon. Several villagers, from all over New Gurgaon, told me that builders started buying their land before it was even included in the master plan.

Some local landholders have fought back against the apparent corruption in Hooda’s administration. The Indian Express reported in July 2013, that residents of Badshahpur village filed a joint petition against the state. In its ruling, the High Court of Punjab and Haryana said, “the facts mentioned by the petitioner, prima facie, disclose persistent abuse of powers by the state government in the matter of acquisition and release of land in and around Gurgaon.” The court ordered that an independent agency look into the matter and that Haryana provide a response.

Other cases have been overturned or are stuck in the courts. A PIL filed by villagers from Nathupur alleged that the land they were made to sell cheap to the government for infrastructural development was passed along to DLF for a particular project in its Cyber City in 2006. In 2010, the high court ordered DLF to return the land, but in January 2012, the Supreme Court ordered a stay on the judgement.

The courts are full of cases relating to land acquisition. But a growing amount of litigation now comes from the new neighbourhoods that have already been constructed. Gurgaon’s wealthy and middle-class citizens are increasingly fed up with builders’ disingenuous marketing practices, with the state’s lack of infrastructural planning, and with a city that was built not so much to last as to grow.

[ IV ]

IN 2011, a shot was fired across the bow of Gurgaon’s leading real estate developer by the Competition Commission of India (CCI), which fined DLF Rs 630 crore for various abuses in a case involving owners of flats in The Belaire, an apartment complex in east Gurgaon. Situated not far from the Delhi border and the road to Faridabad, The Belaire is made up of five 29-storey towers that went on the market in 2006. Due to be completed by January 2010, construction of the complex dragged on; some owners still don’t have possession of their flats. In the meantime, DLF revised the building plans from what had been stipulated in the builder-buyer agreements. When owners complained, the developer took recourse to the complex, manipulative clauses in those same agreements to brush them aside.

A group of Belaire buyers who had found each other airing similar grievances online soon formed the Belaire Owners Association (BOA). In May 2010, the association filed charges with the CCI, accusing DLF of abusing its dominant position in the market in order to enforce unscrupulous contracts on buyers. Sanjay Bhasin, president of the association and vice president at the telecom company Viom Networks, enumerated the residents’ complaints for me in broad strokes: construction of the Belaire apartment complex had been delayed; DLF had effected a unilateral change in the building plans; and there was a suppression of terms in buyers’ contracts.

The CCI soon launched an inquiry and, for the first time, many of the real estate practices that had helped build and populate Gurgaon were brought to light. It emerged that when it collected money from buyers, DLF had no approvals for The Belaire—not for the original 19 floors it sold, nor the additional ten it later tacked on to each tower. Other related manipulations included violation of the state-mandated floor area ratio (FAR) restriction—the ratio of a building’s total floor space (on all storeys) to the size of the plot on which it stands. The Belaire plot took up only 6.67 acres, which the owners’ association calculated was 14 acres less than would be necessary to meet the FAR requirements. The CCI found that Belaire residents had technically paid for and were entitled to land that had instead been left open to further development. Sanjay Sharma of Qubrex brokerage helped the Belaire owners with research for the case. He told me that violating FAR norms “has become the easiest way of making money for the builders”. When I visited Belaire with Bhasin and other members of the BOA, I noticed a cordoned-off patch of grass in the middle of the complex. Bhasin told me that it was village panchayat land that is still under dispute.

Manoj Pandey, the director general of the CCI, submitted his case report in late 2010. In it, he upheld the owners’ allegations and noted that DLF, HUDA and the Haryana DTCP hadn’t cooperated with the investigation. He held the authorities guilty of connivance, and recommended a penal enquiry. “Was DLF so powerful that Director, Town Planning could have just ignored the infringements or Town Planner did not perform his duties well,” Pandey wrote. “The way Director, Town Planning has not answered to notices issued by this office (six repeated notices on various dates) only show that he was perhaps aware of these infringements but chose to ignore them.”

In its arguments against Pandey’s report to the CCI, DLF questioned the validity of the findings by downplaying its market dominance—while also arguing that restrictions on dominance only came into effect after 20 May 2009, when the national Competition Act was amended, long after the company had sold the Belaire apartments. As for the “abusive” clauses found in its contracts, these were “industry practice”, it claimed. For the first time, DLF also scaled down its estimate of the size of its Gurgaon holdings from 3,500 acres to 1,650 acres. It denied the accusation of dominating the luxury real estate market by arguing—incredibly—that no such segment as “high-end residential accommodation” existed in Gurgaon. It also tried to argue that it couldn’t be considered dominant because, it said, 85 to 90 percent of its bookings happen through brokers, who sell multiple properties. To support its arguments, DLF submitted two reports—one from Jones Lang Lasalle Meghraj, an international property consultant with whom they have a business relationship, and one from Genesis Analytics, a consulting firm operating in emerging markets—and one affidavit from a broker.

DLF’s arguments appeared particularly absurd given the sorts of claims freely made by KP Singh in his autobiography, and in the company’s marketing material. Eventually the CCI’s 2011 judgement, which DLF unsuccessfully tried to overturn at the Delhi High Court, agreed with the director general’s findings. In some cases, though DLF was technically abiding by the letter of its buyers’ agreements, the contracts were deemed to be “highly abusive”. The Commission ruled that it was “clear that DLF has been grossly abusing its dominant position, and that too against a vulnerable section of consumers … There appear to be no mitigating factors for taking a lenient view.” It also noted that, because DLF did not escrow funds from its various projects, there was no way to guarantee that money earned from the future residents of one proposed building would not be funnelled towards another speculative deal. The commission slapped the company with the Rs 630-crore fine. DLF then took its appeal to the Competition Appellate Tribunal, which has stayed the CCI’s order while it rehears the case.

The Belaire Owners Association is one of an increasing number of organisations set up by homeowners to address misleading marketing practices and infrastructural failures at complexes like DLF’s Belaire, Regency Park, Park Place, and The Magnolias, and also at Raheja’s Atlantis. Unlike coalitions of village smallholders, many of these groups are made up of wealthy and well-connected business people and retirees who have the means to fight lengthy court cases.

In 1993, Brigadier Madanjeet Singh used his savings and pension to buy a flat in a new DLF project, Regency Park. The property was supposed to be ready in two years, but DLF sold the flats before it had the necessary clearances, and in the end Regency Park took five years to complete. As a result, many buyers lost three years of expected rental income, which they intended to use to pay their monthly installments. When I met Singh in Delhi (he’s been living with his son since he retired), he told me that on top of the delay, each tenant was asked to pay additional construction expenses, known as “escalation charges”, of Rs 4.5 lakh “for adding things like standby electricity, fire safety, payment to some architect for Mediterranean touch and whatnot”. Some customers paid up, but 40 others, including Singh, filed a case with the Monopoly and Restrictive Trade Practices Commission, part of the Ministry of Corporate Affairs.

In 2006—13 years after Singh purchased his flat and eight years after the building’s completion—the commission ruled that demanding escalation charges was an unfair trade practice. But DLF appealed to the Supreme Court, and the case is still under litigation. In the intervening years, some Regency Park residents sold their flats in distress sales, some privately negotiated with DLF, some died, and others gave up. Only Madanjeet Singh stood his ground.

At some point, the company offered Singh a compromise: a 50 percent reduction of charges in return for the withdrawal of some of the allegations. He told me, “They mockingly said, ‘You will get to hear from the court only if it comes up for a hearing.’” Singh refused. Today, his Regency Park flat remains locked up and DLF has demanded additional “holding fees” of Rs 16 lakh. “They are aware we have limited lifespan with no resources,” Singh said. “My Supreme Court advocate died, and they are waiting for me to die.” A final hearing in the case was scheduled for 4 January 2014.

The industry is watching these cases closely, but the realities of the situation may be best described in an observation buried inside the CCI director general’s report on the Belaire case. “The case under consideration here is a case where some affluent of society are involved,” the report states. “A common middle class man, if caught in such a non-responsive system and a maze of clauses … he/she would not have done anything.”

SS Dhillon, former principal secretary of the DTCP (and currently principal secretary to Chief Minister Hooda), dismissed litigants such as the Belaire owners in the Indian Express, in September 2012, as “retired CEOs of companies, army generals and bureaucrats, who have no work and fat pensions to pursue litigation. They have seen the best of places in the world and after investing in a Rs 4-5 crore apartment, they have the same fancy ideas and expect facilities like New York in Gurgaon. Much of our valuable time is being devoted to fighting court cases and satisfying the ego of these people.”

But even wealthy residents can be wary of litigation, as I discovered when I visited Raheja Atlantis—where the cheapest apartment going cost Rs 1.6 crore—to talk to some of its tenants about an incident in March 2013. An LPG pipeline had burst, injuring a maid and causing building-wide panic. It took over three months for Raheja to fix the problem, residents told me. Meanwhile, they discovered that the building’s LPG pipes were improperly installed, and had corroded ten years earlier than expected.

At the time, residents felt this was the final straw on top of a stack of other issues at Atlantis, including shoddy construction of walls, lack of adequate power, and a reluctance by Raheja to hand over the building’s management to the Resident Welfare Association, as is required by law once the building is complete. Holding on to the property allowed him to reap the profits from side projects on the land, like a club, and a spa open to non-residents. (Raheja has since relinquished management of Atlantis to its RWA.)

Hoping to send a signal to the builder, residents started airing their frustrations in the media after the blast, rather than getting embroiled in the courts. But as the problems at Atlantis began making news, many owners also worried that it might affect the value of their condominiums. The initial booking price when the complex was launched, in 2005, was Rs 2,150 per square foot; this leapt to Rs 14,975 in less than five years. Residents were worried that the demand might take a beating, so they pressured their neighbours to stop speaking to the press. There were at least 68 vacant flats, which were bought purely as investments, and their owners were worried, too. One resident I spoke to called me later to request anonymity. “They would rather be quiet and see their property value go up,” he said of his neighbours. “In any case, why single out Raheja? Every housing complex in Gurgaon has a problem with the builder over one thing or the other. I never came across a place where they are at peace with the builder. The Competition Commission of India (CCI) slapped DLF with a huge fine for abusing their dominant position. Well, every developer in Gurgaon is doing that.”

When I met Raheja, I asked him about the growing number of law suits in Gurgaon. “Real estate is the toughest business to do,” he reflected. “People invest their life’s savings and have high expectations. To fulfil these is a daunting task—even god can’t keep everybody happy.” (DLF Chairman KP Singh’s response to the CCI order fining his company ran along similar lines: “When you have thousands of customers, some people get into litigation for the heck of it. We deal with them,” he told CNBC.)

Gurgaon’s growth has been aided by the widening of roads, such as National Highway 8 (above). New developments are coming up along the curve of the Dwarka Expressway, in the city’s peripheral sectors. UDIT KULSHRESTHA FOR THE CARAVAN

Raheja recommended managing expectations: “It’s simple, define what you want to give to the customer and give more.” But he clearly also had a good grasp on marketing psychology. “The demand will grow according to how much you show,” he told me. “We are, after all, human beings. We are susceptible. When we show them something new, they think, ‘My next house should be like that.’” His company’s brochure for Atlantis promised “waterbodies shimmering like jewels in the crown of the lush green landscape”, and a building of mythical dimensions, recalling a lost city “populated by a noble and powerful race which possessed great wealth and power”. Of the legendary hubris and subsequent destruction of this race by a tidal wave, no recognition appeared.

[ V ]

ONE EVENING IN JUNE LAST YEAR, I sat with an affluent property broker who runs his successful business in a Gurgaon mall, and his friend, in Delhi’s run-down Yashwant Place shopping complex. In the universe of aspirations that Raheja described, brokers are the storytellers who talk up Gurgaon’s high rises, ensuring that prices remain lofty and that demand always seems to be soaring.

As we ate momos and sipped warm beer, the broker dispensed wisdom about Gurgaon’s real estate market. He had recently made good money selling flats in The Crest, a DLF project that finally went on the market in May after being held up due to litigation against the company. The broker had lined up clients well in advance of the launch. “DLF has a great fan following and the first phase was sold out within hours,” he said. “The court cases don’t really matter.” Many loyal investors buy at least two flats in each DLF project, whatever the legal hassles and infrastructural problems associated with the company, he told me.

Some of the people buying into such developments are closely connected to politicians, the broker said. “Look at the scams: 2G scam, coal scam, CWG scam, railway scam—they run into lakhs of crores,” he told me. “What do you do with such money? How much gold can you buy? They invest in land in the names of their family and friends. Real estate absorbs all the black money.” (An example that shows just the tip of the iceberg: in November 2012, a flat belonging to Om Prakash Chautala—who was Haryana’s chief minister four times, most recently from 1999 to 2005—was used as evidence in the probe into a teacher recruitment scam, for which Chautala and his son were convicted and sent to jail last January.)

“We make the builders,” the broker said. “We are his arms, feet, eyes and heart.” Brokers book most of the flats in a new project—some of them told me builders won’t launch a building without their assurance—creating an artificial sense of high demand. Builders then substantially hike the prices for the remaining flats. Customers, fearing future increases, are quick to bite. Brokers can then sell the booked flats at a premium. The extent to which the price of an apartment is commensurate with its quality is a secret that stays between the builders and brokers. Several brokers put the starting price of a flat in Gurgaon at about Rs 1 crore. With a minimum 1 percent commission, they make at least R1 lakh per transaction.

The conversation turned to the gullibility of prospective buyers. “They might not know G of Golf, they might not know that a golf kit costs Rs 1.5 lakh, but they will buy a ‘golf view’ apartment,” the broker’s friend told me. “Some of them think that their kids will play golf and become refined, because it is a rich man’s game.” As for “end-users”—the 20 percent of buyers, by some broker estimates, who are purchasing flats to actually live in them rather than sell on—neither brokers nor builders have much sympathy for their problems. “If I don’t do it, someone else will,” the broker said. “In just five minutes, you could lose a lakh. It’s a rat race, boss.”

Buyers jump at the slightest discounts and developers conceal building flaws, but the middlemen always know best, the broker told me. “The buyer thinks he is a hero making a fool out of the seller and the seller thinks the same,” he said, laughing. “We brokers, the real heroes, are looking at both of them. That, in essence, is the story.”

But there are others for whom the city embodies a less venal entrepreneurial spirit. One grey monsoon morning, I visited Kunwer Sachdev at his sixteenth-floor flat in The Aralias, perhaps the city’s most expensive apartment complex, built by DLF on the east side of Gurgaon. A compact, cheerful man in his fifties, Sachdev is the CEO of Su-Kam Power Systems Limited, a Rs 1,000-crore company that he described as an “Indian multinational”.

We sat on his spacious balcony, contemplating the view from his private piece of heaven. The Aravalli hills, green waves in this season, stretched out in the distance, and cars plying the road to Faridabad appeared inconsequentially small. A swimming pool surrounded by manicured bushes and frangipani trees shimmered below. Across the road, the DLF Golf & Country Club sprawled over 142 acres. A cool breeze and light drizzle turned the balcony into a beachfront. “You won’t get this view anywhere in Delhi, or even in Gurgaon,” Sachdev remarked. He was paying Rs 3.5 lakh per month in rent while awaiting the completion of his own Rs 13-crore apartment in DLF The Magnolias next door. I asked him how he liked living at The Aralias. “You know, when I didn’t have money, I used to think I will eat chocolate every day,” he reflected. “This view also gets boring after a while.”

Despite the city’s problems, and its evaporating appeal, Sachdev still seemed to believe in the basic promise of Gurgaon. The son of a railway clerk, he grew up in the capital and called himself a Dilliwala at heart. After graduating from college, he sold pens along with his brother, then became a cable television provider before making it big in the late 1990s with Su-Kam Power, an inverter manufacturing business. In 1998, he moved to Gurgaon, where he bought land to set up an office and two factories, in Udyog Vihar VI, just off National Highway 8. It was cheaper to buy commercial land here in Haryana than in Delhi’s industrial areas, and it was easier to run a business and get licenses, he said. When I asked him about the infrastructural problems that have become synonymous with Gurgaon’s rapid expansion, he said, “I am not a foreigner. They can complain, but if I start complaining I wouldn’t have been able to achieve any of this.”

“Gurgaon gave me the right environment and opportunity to change my lifestyle,” he added. “There was space for me to go out cycling and walking with my kids within the apartment complex, which I don’t think was possible in Delhi.” I asked Sachdev if he played golf. ��Golf is not only slow, it is very slow,” he said. “I started but gave up after I got bored.” (Gurgaon has about a dozen golf courses, some more exclusive than others, and Haryana’s chief minister has suggested it needs more.) I looked at the vista again, and noticed labourers with yellow hard hats on the greens, and also maids on other balconies, gardeners on the lawn downstairs, security guards at the gate.

We took the lift downstairs to the lobby. Sachdev likened The Aralias to Zurich’s Dolder Grand hotel, where he said he felt “at home”. A path led to a dimly lit garage, where cars with custom number plates were parked. “All the ones with the VIP number 7 or 8 are mine,” he said. As he stood by his blue Porsche Cayenne, I asked him if Gurgaon roads were conducive to joyriding; he had mentioned earlier that they disintegrate at the slightest drizzle. As if confiding a secret, he said, “Yahan kya hai na, log dikhavay ke liye rakhte hain (The thing about this place is that people keep them just for show).”

[ VI ]

ALL THE WAY ON THE OTHER SIDE OF TOWN from the DLF Golf Club, past the glass and steel heart of Cyber City and across National Highway 8, is the village of old Gurgaon—one of about three dozen that fall within the urban sectors of the district. Gurgaon village, in Sector 6, feeds the adjacent city with a supply of labour and services, yet lives and breathes like a mofussil town. There are no fine dining restaurants in old Gurgaon, though the bakery in its Sadar Bazaar still sells a bloated bun with cheese on top as pizza. Its narrow roads lead to a wider one, which connects to a small railway station on the 19th-century Delhi–Rewari line.

Gurgaon’s MLA, Sukhbir Singh Kataria, lives here, in a huge bungalow called Bhateri’s Villa, with a nameplate that refers to the area as “Gurugram” (“Guru’s Village”), a name believed to originate in a story from the Mahabharata. (Kataria won as an independent candidate in 2009, supported the Congress government, and was rewarded with the state sports ministry. He’s now accused in an FIR, along with several others, of orchestrating the forgery of fake voter cards that were used in his 2009 win.)

On the surface, the village seems untouched by the MLA’s prosperity, or the city’s, though unauthorised colonies on this side of the highway—and in other old villages or undeveloped plots—have the voter numbers to propel candidates into political office. Unregulated residences have been proliferating in places like old Gurgaon to accommodate a growing, more densely packed urban population; the soaring high-rises have limited room for domestic staff, and aren’t priced for the working-class income bracket. According to news reports, there are about 75 such unauthorised colonies in the district and 44 have been recommended for regularisation by the Municipal Corporation of Gurgaon (MCG), a body belatedly formed in 2008 to supplement state administration with local governance. GL Sharma, the former Congress Party president for Gurgaon, explained the demographics to me: “On that side, high-rises kept coming up. The service providers to those areas settled down on this side, where the population has increased five-fold.”

Politicians patronise these areas because they are significant vote banks: Sharma estimated that each unauthorised settlement had close to 4,000 voters, and a good number of them exercise their franchise. In the city’s new residences, he said, “the voting percentage is only 20 to 25 percent, whereas in unauthorised colonies and villages it is up to 80 percent.” He added, “The latter don’t even get potable drinking water from the government. The people on the other side get swayed by things like 2G corruption, but my loyal voters are in villages and unauthorised colonies.”

The close quarters, stark contrasts and lopsided power balance of these divided but interdependent cities all feed into the underlying social tension in Gurgaon, where the battles that determine how the city rises or sprawls are waged plot by plot and sector by sector. Last monsoon I met Ashok Kumar Yadav, a former wrestler and MCG councillor of a ward that includes his village, Wazirabad, which supported him in the new Corporation’s first elections in 2011, as well as several residential high-rises. He sat on a plastic chair in front of his house, near a billboard with his name, photo and designation on it.

Yadav’s plot, on which he continues to grow fodder for cattle in one corner, is set a little apart from Wazirabad village and flanked on one side by apartment blocks. Since 1984, when the state acquired land in the area, he has been fighting HUDA in court to keep his holdings. Nearby, some old men were huddled around a game of cards and a hookah, but eventually came over to talk to us. “All our village land was acquired leaving us nothing, not even the village roads,” one of them, Sonaraan, said. The landholdings were small and HUDA did not pay much for them: “Kaudiyon ka bhaav paise diya haiek sau chhe rupaiya gaj. Jungle hamara mufat mein gaya hai.” (They gave us cowrie money: Rs 106 per gaj—about nine square feet. Our jungle went for nothing.)

“We just live on rents and play taash (cards),” another man, Ranbir Singh, said. “Our children didn’t get jobs in the big companies that came up, not even a guard’s job. Rents are our only source of income. We’re as good as dead.” Another man teased him, saying, “Don’t talk too much or you’ll end up in jail.” His voice was tinged with suspicion.

Yadav opened up after a while. “We used to build a mud dam and store water coming down from the hills, but now it all goes into the sewer,” he said. He pointed toward the buildings nearby—part of a privately built residential township called Ardee City, which was established in 2009. “You see that building there? It used to be our pond,” he said. Meanwhile, some of Ardee City’s residents have complained about the condition of their roads and flooding in their park—even taking to the streets to protest against builder Ardee Infrastructure in May last year, after they were asked to pony up Rs 17,000 per flat for a new security system for the elevators.

Yadav’s teenage sons, Dev and Raj, were home—it was too wet to play volleyball on their usual patch of land. I asked them if they had any friends from the residential complexes in the area. “Yeah, we do, but we are not their friends, they are our friends,” Raj said. “They need us, but we don’t need them. Because we are from the villages, they think we can be on their side when there is a fight,” he explained. Yadav’s sons said they don’t get admitted into the city’s schools either. “They reject the village kids,” said Dev, who is studying law at a nearby government college. “We have to give a sector address to get an admission.” To them, Gurgaon is a sea of urban sectors in which their villages are small, crowded islands that are slowly being submerged.

Economic and social inroads into the middle class exist, but are tenuous, easily washed away. Ashok Kumar Yadav once owned a pub, IPSA Bar & Lounge in Sahara Mall, in the heart of Gurgaon, but his sons pressured him to sell it around 2011, when the mall’s clutch of seedy bars started making news for all the wrong reasons—a gang rape, brawls, and confrontations between panchayat members and pub owners, some of whom were also formerly farmers. Yadav seemed eager to demonstrate that his livelihood now relied on his two trucks, which were parked in front of his house. When I asked him how much land he had, he answered me with a mock-serious question of his own: “Do you want to get it acquired by government or what?”

From Wazirabad, I took the Golf Course Road north to Sahara Mall—less than ten kilometres away but a world apart. Gurgaon’s shopping complexes—more than 30 of them—guzzle power and spawn a glut of traffic on the town’s “mall mile”, a stretch of the Mehrauli–Gurgaon Road that runs from south Delhi into the new city. It was once lined with marble-flooring vendors and furniture stands all the way from the capital’s border—now, home decor boutiques fill the malls on what is Gurgaon’s main thoroughfare. Some restaurants and bars cater to the young professionals working in Cyber City, but some—like IPSA and others in Sahara Mall—are mostly frequented by villagers and petty brokers, who live on cash, from one deal to the next drink.

Inside Sahara Mall, several young men and women were milling about—two of them came up and tried to sell me a discounted entry into one of the bars. Once in a while a group of women in tight dresses and high heels walked past knots of loitering men, capturing their attention briefly before heading into Prison, Blue Eyes, IPSA or Shadow’s. A beefy pub owner was reprimanding a couple of young women for spending too much time on their smartphones and not enough with the patrons. They had their nightly targets to meet.

I ventured into Shadow’s after shelling out Rs 500. Inside it was dark, except for a green laser emanating from a corner above the DJ who spun Bollywood dance numbers. The air was hot, and laden with the stench of alcohol, sweat and smoke. Someone broke a bottle in a corner. Drunk men were gyrating to loud music; some tried to engage women in conversation. Next to me, a woman turned and walked away from a man. He took some cash out of his pocket, gave it to her and dragged her close to him.

I pushed my way out of the bar and took the elevator down to the basement below the aluminium-clad bulwark of the mall. The parking lot reeked of urine; it reminded me of CCTV footage I had seen replayed on a news channel last winter, of five men beating up a mall guard who tried to stop them from pissing in the basement.

Outside, the monsoon rain was falling heavily, turning the clouds of construction dust that hang over the city into grimy puddles on its streets. Navigating through a traffic snarl, I turned right onto the arterial Golf Course Road, which runs south through Gurgaon’s eastern sectors. The asphalt was rapidly disintegrating. A series of concrete poles ran alongside it, holding up a tangle of thick black electric cables, as if the city were wearing its intestines around its neck.

Correction: One gaj is nine square feet, and not 1/40th of an acre as this article earlier stated. The Caravan regrets the error.